An investigation of the contribution of new innovations in the growth of dairy industry in Kenya
Kimani, Zachary N.
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Prior to liberalization of the dairy industry, Kenya Co-operative Creameries founded in (1962) enjoyed the monopoly of processing and selling milk products in Kenya (Omiti 2000). The effect of liberalization was the entry of new Milk players in the dairy industry. By 2005 Kenya Dairy board had 52 licensed dairy firms out of which 34 were operational according to Kenya Dairy board report (2005). The purpose of this study was to establish the contribution of new innovations in the growth of dairy industry in Kenya after liberalization in May 1992. Innovations are new ways adopted by dairy firms to increase their market share. This includes new products, new markets, new technology, new organizations formed to promote their industry and new methods of promoting milk drinking aimed at cultivating milk drinking culture. According to Kenya Government (2005) the demand of milk was 2.7 billion against national out put of 2.74 billion litres. Liberalization of the dairy industry, led to increased competition, which resulted in collapse of well-established dairy processors such as Premier and Aberdares dairy (Kenya Dairy Board 2005). The new players in the market such as Spin Knit and Brookside Ltd become more competitive and succeeded to outdo the already established players and started commanding the larger share of the market. The question is, what are the contributing factors for both failure and success of these firms? This study sought to establish whether new innovations adopted by milk processing firms contributed to their success and whether lack of these innovations contributed to the collapse of some of the dairy firms. The objective of this research project was to identify new innovations in the milk processing firms after liberalization and how these new innovations had contributed to their market share. The target Population was all the 34 milk-processing firms, which were functional and registered by Kenya Dairy Board by 2005. The researcher conducted a census on these firms. Methods of data collection included questionnaire administration and observation. Questionnaires were administered to all the registered and operational milk processing firms in Kenya. Data analysis was done using both qualitative and quantitative technique. The data was presented using tables, bar charts, pie charts, percentages among other. The study established that new innovations had contribution greatly to the increase in sales and the overall growth of the dairy industry. The study identified the new innovation adopted in the dairy industry in the last three years which included; new products, new markets, new packaging, new management and new technology. The factors that contributed greatly to growth of the dairy industry were found to be; market demand, new packaging, management style, sources of finances and new technology. Competition was found to be a major challenge that always affected the operations of the dairy firms. The study recommended that the prices for dairy products be regulated by a government body to prevent big and well-established firms from undercutting small and upcoming ones. The study found a need for a national policy on standards governing the industry from the farm level to finished products. This will ensure that the products that finally go to the markets are clean and up to standard for consumer use. Finally the government needs to play a significant role in ensuring that the dairy firms are well supplied with good and efficient infrastructure. This will save on cost of production and hence make the product affordable to the consumers.